Trading Strategies: Power Move and Crawler Move

Overview

• Main Question: Will the price reverse higher from support or break down?
• Understand the types of moves that happen when the price approaches support or resistance: Power Move and Crawler Move.

Power Move

What is a Power Move?

• Power Move into Support: Series of big bearish red candles approaching support.
• Power Move into Resistance: Series of big green candles approaching resistance.

Significance of Power Moves

1. Fear of Giving Back Profits: Traders short at resistance might take profits to avoid losses, inducing buying pressure.
2. Technical Analysis: Traders see the obvious support area and buy, creating buying pressure.
3. Reversal Potential: Reversal can be swift because the next obstacle (resistance) is far away, leading to a larger potential profit area.

Example of Power Move

• Bearish candles into support: Indicates possible reversal due to buying pressure and lack of obstacles.
• Caution: Not all power moves lead to reversal.

Crawler Move

What is a Crawler Move?

• Into Support: Series of lower highs approaching support (sign of market weakness; sellers are in control).
• Into Resistance: Series of higher lows approaching resistance (sign of market strength; buyers are in control).

Significance of Crawler Moves

• Lower Highs into Support: Indicates selling pressure and higher likelihood of support breaking.
• Higher Lows into Resistance: Indicates buying pressure and higher likelihood of resistance breaking.

Example of Crawler Move

• Lower Highs into Support: Sign of weakness, likely leading to a breakdown.
• Higher Lows into Resistance: Sign of strength, likely leading to a breakout.

Trading Strategies

Using Power and Crawler Moves

• Power Move into Support/Resistance: Look for additional signs before trading the reversal.
• Crawler Move into Support/Resistance: Likely to break following the trend seen (breakdowns for support, breakouts for resistance).

Support and Resistance Trading Strategy

1. Identify Market Structure: Downtrend in New Zealand/Canadian pair on 4-hour timeframe.
2. Area of Value: Resistance area to look for trades.
3. Entry Trigger: Valid entry trigger such as bearish engulfing pattern.
   • ATR Stop Loss: Set stop loss using ATR (Average True Range) to avoid premature stop-outs.
   • Targets: Dual targets - Conservative and further target using Fibonacci extension for potential profits.

Example Recap

Trade Management

• Entry: When market shows valid entry trigger (e.g., bearish engulfing pattern), enter on next candle open.
• Stop Loss: Use ATR indicator to set logical stop loss levels.
• Targets: Use swing lows and Fibonacci extensions to set multiple targets for profit-taking.
• Handling Trades: Do not shift stop losses to break even prematurely.

Analysis of Market Patterns

• Crawler Move into Resistance: Signals potential breakout; set logical stop loss and profit levels.
• Alternative Opportunity: Power move into support may offer buying opportunities.

Risk Management

1. Stop Loss Management: Utilize logical levels and ATR values to avoid premature stop-outs.
2. Profit Management: Use multiple targets and Fibonacci tools to maximize potential gains.

Bonus: Price Action Trading Secrets Book

• Contains strategies and methodologies for identifying trading opportunities using support, resistance, and other price action techniques.